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KYC: Treasury’s Necessary Nightmare. Here’s How to Comply.

  • By Andrew Deichler
  • Published: 4/19/2016

ThinkstockPhotos-486800502FORT WORTH, Texas -- It’s no secret that know-your-customer (KYC) compliance is a headache for corporate treasurers operating internationally. This week at the TEXPO 2016 finance and treasury management conference, multiple treasury professionals voiced their frustrations.

All in all, practitioners seem resigned to the fact that they just need to grin and bear it; KYC is here to stay and they can’t take shortcuts.

Ronald Reno, CPA, vice president and corporate treasurer for global business advisory firm FTI Consulting, told AFP that KYC has been “a nightmare” for his organization. “I hope that this increased banking regulation is meeting its objectives to keep the terrorists from getting money and the crooks from using the banking networks for their own purposes, but it’s really put a choke on corporates,” he said.

Reno noted that since Royal Bank of Scotland (RBS) decided to close its global cash management services last year, he is in the process of replacing all his accounts in continental Europe with another bank. “Even though I’ve known for a year that I was going to have to make this transition, I have been fighting the KYC battle with each branch of the bank that I selected,” he said. “We’re going to finish on time, but it’s going to be right down to the wire.”

In an attempt to make the KYC process easier, Reno only uses four global relationship banks. Unfortunately, that didn’t simplify things the way he had hoped. “I thought, ‘Well, this big bank knows us; they should be able to tell their local branches that we’re good,’” he said. “But apparently, the way the regulations work, that’s not good enough, just like they didn’t know us. So I don’t have any magic solutions other than just allow three to four times as much time as you would normally need. That’s tough when you’re trying to expand.”

Stephanie Allen, director of treasury for Research Now, agreed that there are no workarounds for KYC. “I try to just set the expectations for the people in my company that have to sign and do it,” she said. “We just know we’re going to have to do more documentation. Each country seems to get more strenuous in terms of what they’re requiring—even in the U.S., quite honestly.”

Allen added that Research Now is undergoing a change of its top executives, so a lot of the signers have changed. KYC has been quite challenging as many of these new executives are being asked for information that they are comfortable with divulging. “Quite honestly, if I just came in, I wouldn’t understand why I’d have to give you as much information as they’re asking for,” she said. “But it’s a necessary evil and it’s not going to change.”

Brian Boyle, CTP, assistant treasurer for maintenance products marketer NCH, agreed that KYC is necessary in order to cut down on money laundering and other nefarious activities. Nevertheless, as a global company with 300 bank accounts, having to update them regularly is a tall order. Therefore, NCH has had to make sure everyone is on the same page in the organization. “Management understands why we’re asking for their utility bills and those types of things,” he said. “That was new to them early on. You just have to let them know what’s generally needed.”

KYC can be a little less of a headache depending on the bank you’re working with, added Boyle. “Many banks, in Europe especially, will go on public sites to get information on corporate structures, etc., so they don’t even have to bother me,” he said. “That’s very helpful. It’s something they can do that is available to them.”

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